“If we have the opportunity to get rid of a tax… I don’t care whether it’s a tax on manufacturing or businesses or household tax… get rid of it,” Mayor J. Collins said on Friday. “If we are an area that does not have that energy excise tax… it puts us in an advantage right away in trying to attract new business to our area.”
Carrollton last week elected to impose the municipal tax on energy contending that the funding was an important portion of the city’s budget.
According To Association Of County Commissioners Of Georgia:
During the 2012 Legislative Session the General Assembly passed Tax Reform legislation, HB 386, which included an exemption on energy used in agriculture production and manufacturing. The legislation also included the option for local governments to levy an excise tax to recover the local portion of sales tax on energy that would otherwise be exempt. The details of the exemption and how to implement the excise tax are spelled out below.
Scope of the Exemption
The sales tax exemption on energy used in manufacturing and agriculture production is broad in scope and may include businesses that one would not traditionally consider an agriculture producer or manufacturer. For manufacturers, the exemption is phased in over four years at 25 percent per year beginning Jan. 1, 2013, with a full phase in by 2016. For agriculture producers, the exemption is a 100 percent beginning on Jan. 1, 2013.
Effect on Counties
The effect on counties will be difficult to gauge and will vary from county to county. The Department of Revenue does not collect data on the types of businesses in each county and their energy usage making it difficult to asses the potential revenue shortfall at the county level. ACCG is working with the energy providers to make some data available to the counties, by request only, which would allow the counties to see the amount of energy used by industrial businesses within their county. Although not a complete revenue assessment, this data will assist counties in determining the potential revenue shortfall relating to the exemption.
Process for Levying the Excise Tax
By now, counties should have sent a notice to their cities of a time to hold an initial meeting regarding whether to levy the excise tax. In order to levy the tax effective Jan. 1, 2013, counties must have an initial meeting with cities to discuss whether or not to levy the tax. Upon deciding to levy the tax, a second meeting must be scheduled to adopt the ordinance no earlier than 30 days after the initial meeting but not prior to counties entering into an intergovernmental agreement with their cities that wish to levy the tax. If this process is not completed by January 1, 2013, the effective date shall be the first of the month immediately following the adoption of the ordinance.
Collection and Distribution
The exemption process is done by self selection. Businesses who believe they are manufacturers under the law can download an exemption certificate from the DOR website, complete it, and turn it into their energy providers. Energy providers are not responsible for determining whether or not the business qualifies. Upon receiving the exemption certificate, energy providers will begin exempting the manufacturer from sales tax on all energy used in manufacturing.
If a local government wishes to levy the excise tax they have to provide a copy of the ordinance to the energy providers in their jurisdiction. Upon receipt of the ordinance, energy providers will begin collecting the excise tax per the instructions of the ordinance and distributing the tax to the counties. Counties, who choose to levy the tax, are then responsible for distributing the cities their share based on the intergovernmental agreement. The law does allow for counties to take a one percent administrative fee to offset the costs associated with receiving and distributing the excise tax proceeds.